principal private residence exemption

principal private residence exemption

an exemption from CAPITAL GAINS TAX on the disposal by an individual of a dwelling house which has been the only or main residence throughout the period of ownership. Only one such property can normally qualify at any one time. The exemption applies to other buildings adjoining the house, such as a garage. The exemption also covers the garden and grounds up to an area of half a hectare (or a larger area if it is justified by the size and character of the house). Where part of the house is used exclusively for business purposes, any gain relating to that part will still be chargeable and an apportionment will be necessary on some reasonable basis, e.g. area. Where a person has more than one home occupied as a residence, he or she can elect which is to be treated as the main residence within two years of occupying the second home. Without such an election, the question of which residence is the main one is determined as a matter of fact.
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